Challenges in Open Access Power in India

For the past few years, introduction of competition has been one of the main points of reform in the electricity sector in India. One of the key measures to bring about the competition is open access where mainly large consumers have entry to the transmission and distribution network to obtain electricity from the suppliers other than the local electricity distribution company. It was expected that allowing the customers the choice of supplier will lead to a powerful and competitive market, which in turn will encourage greater investment in the sector. But the success of open access power has been very limited in spite of the numerous attempts to enable and assist it.

Following are the main challenges discussed briefly:

1. Some places have restricted the open access transactions on the export of power supply when there is a shortage and import of power supply in cases where there is a surplus.
2. Open Access Power has become uneconomical as some of the open access charges such as the cross-subsidy surcharge have been too high.
3. Several consumers are using open access to switch frequently between the market and the discom regulated tariffs. The behaviour creates greater volatility in the load to be served by the discom making the power procurement planning difficult and leading to stranded generation capacity. Such a behaviour by the large number of consumers is likely to harden the resistance to open access power by the discoms.
4. Execution of open access has been a challenge due to the surplus capacity in some states which has led to an opportunistic use by the large consumers. This identifies the need to rethink how the consumers choice of electricity suppliers is conceptualised.

In order to deal with these problems, however mainly the problem of frequent switching, researchers have suggested redefining consumer choice. It also identifies the discrepancy in the perspectives of the Centre and the states about the power sector and recommends the one that recognises it. The centre places its focus on creating a vibrant power market whereas the states addresses more immediate concerns which are mostly about affordable tariffs and issues that have electoral and political repercussions.

Amplus Solar

February 27, 2018